Trump: "The next Fed chair should cut rates"…All candidates support 'rate cuts'

The selection process for Jerome Powell's successor as chair of the U.S. central bank (Fed) has reached its final stages. The Financial Times (FT) reported on the 9th (local time) that four final candidates, including Kevin Hassett, chairman of the White House National Economic Council (NEC), a leading contender, are soon to be interviewed by U.S. President Donald Trump. President Trump has maintained his stance on rate cuts, saying he will "appoint someone who supports an immediate rate cut" as the next Fed nominee.

All next-chair candidates support rate cuts

According to the FT, President Trump and Treasury Secretary Scott Bessent are scheduled to interview Kevin Warsh, a former Fed governor, on the 10th, and at least one other candidate is scheduled for an interview next week. Secretary Bessent reportedly narrowed the list of next-chair candidates to four people and two of them are said to be Kevin Hassett and former governor Kevin Warsh. The FT said, "While Chairman Hassett is still a strong candidate, some on Wall Street are concerned that he is too close to the president and could cut rates too aggressively," and added that the decision to continue additional interviews shows Hassett's appointment is not certain.

President Trump plans to nominate the next Fed chair in January next year. On the 9th, speaking to reporters aboard Air Force One, President Trump said, "We're going to look at a couple of different people, but I pretty much know who I want." The political news outlet Politico reported the same day that when Trump was asked in an interview with the outlet whether support for an immediate rate cut is effectively the litmus test for choosing the next Fed chair, he replied, "Yes." It also noted that all of the candidates under consideration have made clear they support further easing.

Hassett: "I will not yield to pressure to cut rates"

At present, Hassett's nomination appears likely. In a CNBC survey of financial market participants, 84% of respondents expected President Trump to choose Chairman Hassett. 76% answered that the next chair would be more dovish than Chair Powell. President Trump referred to Hassett as a 'potential Fed chair' at a White House event on the 2nd.

However, there is also speculation that Hassett might serve a shorter term than usual. The FT pointed out that although President Trump has repeatedly expressed a desire to appoint Secretary Bessent as Fed chair, Secretary Bessent has declined the position, and suggested that if Chairman Hassett serves a short term and then steps down, President Trump could have the opportunity to appoint Secretary Bessent as Fed chair in the latter half of his term.

Markets largely view Hassett's appointment as a threat to the Fed's independence. In response, Chairman Hassett said he would not bow to presidential pressure and would decide on rate cuts based on his own judgment. At an event hosted by the Wall Street Journal (WSJ) that day, when asked how he would respond if President Trump ordered rate cuts via the social media platform Truth Social, Hassett said, "You just do the right thing," adding, "If inflation went from 2.5% to 4%, then you could not lower rates." He added, "I will rely on a firm commitment to base my judgment and not be partisan."

Regarding the magnitude of future rate cuts, he said, "If the data suggest the possibility of rate cuts, there is plenty of room to do so now," and when asked whether the Fed could cut rates by more than the currently expected 0.25% point at the December Federal Open Market Committee (FOMC) meeting, Hassett replied "Yes," suggesting that a 'big cut' (0.5% point) is also possible.

Reporter Han Gyeong-je